What is pre settlement funding or settlement loan?

Personal injury victims or other ligitant are often injured or out of work and have financial difficulties. This can be particularly problematic if the client or victim cannot handle emergency or living expenses and this financial crunch may impede upon a litigation or lawsuit; without a financial cushion to provide some time to handle the litigation, the lawsuit might not be successful. What pre settlement funding or settlement loan is when a company will provide some some money to the injured individuals against the money and some fees and costs being paid back against the settlement. In most cases of pre settlement funding or settlement loans, the injured party does not have to pay back any of the money if the settlement or litigation is unsuccessful.

Why might an attorney direct their client toward getting some pre settlement funding? Why wouldn’t the attorney just front some money to their client against some part of the future settlement or fees?

It is particularly problematic with a settlement negotiation if the injured litigant cannot handle emergency or general day to day living expenses. These hardships place an undue financial and time burden upon the victim and his lawyer to settle quickly, which may result in a lower or unreasonable settlement amount. By getting some pre settlement funding or settlement loan against a part of the future settlement, the injured victim is granted the time and financial flexibility to pursue a full and fair settlement without the pressures to settle cheaply or quickly.

Also, the reason that a lawyer may direct his client toward a pre settlement funding company is that the attorney cannot ethically give loans or advances to their clients. Attorney can face strict disciplinary actions or loss of their law license if they are found in violation of this. Keep in mind that it is within law ethics for an attorney to refer their clients to pre settlement funding companies as long as those companies do not collect any money back should the case not be settled or won (known as a non-recourse pre settlement funding company).

I am interested in getting some pre settlement funding to cover some expenses while my court case and settlement proceeds. How does one go about getting pre settlement funding

Be sure to compare different pre settlement funding companies and offers from each one, since they may offer different cash advance amounts as well as differ greatly in their costs and fee rates. You probably also want to get direct quotes and package estimates from pre settlement funding companies directly, as using a broker or consultant will results in more fees and higher costs overall.

In order to evaluate your case or lawsuit, the pre settlement funding company will need copies of the complaint, defendant’s answer, and copies of relevant police and medical records, although any items protected by the client-attorney privileges will be off limits.

Most pre settlement funding companies will charge no fees for applying and only get to collect their money should the litigation is successful or is settled. Should no settlement or cash judgment occur, then the client gets to keep the original money and does not have to pay anything back.

A great starting place to get more information from different pre settlement funding companies is to visit the companies in our direct listings.